London house prices fall as rents rise across the capital

Official figures from the Office for National Statistics reveal a divergence in the London property market, with average house prices falling while rents continue to rise. Across the capital, house prices decreased by 2.5% in the 12 months leading to June 2026.

Significant declines were observed in several Inner London boroughs. Westminster saw the most dramatic drop, plunging 25.4% to an average of £854,000. Other notable decreases occurred in Kensington and Chelsea (-14.7%), Hammersmith and Fulham (-13.3%), and Tower Hamlets (-13.1%).

Conversely, rental costs rose for most residents, with an average increase of 3% across London in the year to July. The highest rental growth was recorded in Islington, where prices rose by 5.9%.

Analysts attribute the property price slump to economic uncertainty and recent fiscal policies, including tax hikes by the Keir Starmer government and a planned mansion tax on homes valued at £2 million or more, set for April 2028.